Considering Alternative Fuels? Funding Help Is Available

As someone who oversees business vehicles, you're most likely considering alternatives to gasoline or diesel to cut your fuel costs, help the environment and contribute toward reducing the country's reliance on foreign oil.

You might also have heard about government financial incentive programs that assist businesses in converting fleets to alternative fuels. Did you know that many of these programs are not only for public sector fleets, but for any business? Perhaps you haven't begun your homework because you don't know how to get started.

Funding is available; you just have to know where to look, how to apply and who can help you in the process.

CleanFUEL USA is a manufacturer of alternative fuel dispensing equipment for propane and E85 and a distributor of engine fuel systems and fleet management network services. The company also helps fleets of any size apply for financial incentive grants available for companies that want to move in the direction of alternative fuels.

Navigating the Funding Maze

"After 15 years in this business we've got our fingers out there on various funding opportunities,"says CleanFUEL USA CEO Curtis Donaldson. 

Donaldson cites the case of the Blue Skyways Clean School Bus Program, which has different application deadlines for each region. CleanFUEL consolidated the information into layman's terms on a one-page sheet, which was sent to all Blue Bird bus dealerships. The dealership then notifies its customers of the funding opportunity.

For a fee, CleanFUEL USA will help companies fill out the often-cumbersome paperwork involved with applying for that funding. Donaldson says the company recently filled out a 59-page document for a school district. [PAGEBREAK]

Funding opportunities for public and private fleets can come from propane, natural gas, biodiesel, E-85,electric vehicle charging stations, or any other fuel that's considered clean vehicle technology, Donaldson says.

A major clearinghouse of funding opportunities is the U.S. Department of Energy's Clean Cities, a government-industry partnership established to provide tools and resources to promote and deploy alternative fuels, vehicles and information.

Donaldson has assisted Clean Cities management with policy and implementation strategies. Each of CleanFUEL USA's representatives are members of local Clean Cities coalitions and participate in events and program execution plans for infrastructure and vehicle procurement for public and private fleets.  

CleanFUEL USA will also consult with fleet operators on the best opportunities for funding based on various characteristics of the fleet. The company provides a two-page fleet profile questionnaire that asks fleet managers information such as how many vehicles they oversee, the vehicle makeup, how many miles they travel per year and how many gallons of fuel they use.

CleanFUEL USA provides fleets with the proper forms to inform the IRS that their business received the funding. The company also offers businesses a proprietary fuel card that lets them pull up detailed fuel reports on each of their vehicles.

Generally, fleets apply for funding in one or more of the following four areas: building an infrastructure, buying the alternative-fuel vehicle, obtaining a credit toward each gallon of alternative fuel purchased and developing cleaner vehicle technologies.

Fueling Infrastructure

Fleets can apply for funds to help build infrastructure for the supply of alternative fuel their company will use.

"The right infrastructure is the first step," says Jon Van Bogart, CleanFUEL USA's western regional manager. He said federal incentives are available that fund 30 percent of the cost of infrastructure, up to $30,000. These incentives are available for propane, natural gas, biodiesel and E-85 fueling systems, as well as electric vehicle charging stations, or other fuels that are considered clean vehicle technology.[PAGEBREAK]

Vehicle Buy-Down

Fleets can also get funds to cover some of the price difference when they replace a gasoline- or diesel-powered vehicle with an alternative-fuel vehicle.

For example, if a business has a $50,000 diesel vehicle in its fleet and wants to replace it with a propane version that costs $65,000, the company could apply for a grant to cover some of the difference. The federal incentive is 50 percent of the difference, so the company could apply to receive 50 percent of the $15,000 difference, or $7,500.

Some vehicles may qualify for more funding, depending on how "clean" the vehicle's certification is.

Fuel Credit

Fleets using alternative fuels qualify for a tax credit amount per gallon. Propane and natural gas qualify for a 50-cent credit per gallon. If you operate a fleet with your own infrastructure, you can fill out an IRS form and get 50 cents per gallon for every alternative fuel you use.

Since natural gas and propane are already less expensive than gasoline, this credit can bring the cost of propane down to about $2 per gallon, helping a great deal in reducing a company's fuel costs. The program can have similar results for natural gas, Van Bogart says.

For biodiesel, the credit is based on the percentage of biodiesel in the fuel. For B-20 (20 percent biodiesel, 80 percent petroleum fuel), the credit is 20 cents per gallon. B-50 would be 50 cents per gallon and B-100 is $1 per gallon.

R&D Incentive

Research and development funding is available for companies that have come up with their own innovative way of developing clean fuel technologies. Government agencies, wanting to accelerate the commercialization of cleaner technologies to the marketplace, encourage companies to share new ideas.

If your company has already developed an innovative clean fuel technology, you can apply for additional funding to turn it into a demonstration project.